Indian oil and gas companies Bharat Petroleum Corporation Limited (BPCL) and Gas Authority of India Limited (GAIL) have signed a long-term gas supply agreement.

Under the agreement, which is valued at Rs630bn ($7.56bn), BPCL will supply propane to GAIL’s petrochemical facility in Usar, Maharashtra.

BPCL will deliver 600ktpa of propane, a feedstock for petrochemicals, from its liquified petroleum gas import facility at Uran.

As part of its efforts to cater to the rising demand from India’s petrochemical industry, BPCL is expanding its Uran liquefied natural gas facility to handle three million tonnes per annum (mtpa) of propane and butane imports from the current capacity of 1mtpa.

With operations scheduled to begin in 2025, GAIL’s propane dehydrogenation (PDH)-polypropylene project in Usar is India’s first propane PDH facility.

The PDH facility will have a nameplate capacity of 500ktpa, with propylene production integrated into a polypropylene plant of similar capacity.

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By GlobalData

Polypropylene is used for manufacturing plastic products.

BPCL said the need for polypropylene is expected to soar, rising from 4.9mtpa in 2020 to 6.3mtpa by 2025, which makes this new venture a natural fit.

In August 2023, reports emerged that GAIL is closing in on a deal to buy LNG from QatarEnergy.

If a deal is signed, GAIL could buy 1mtpa of LNG for more than 20 years.

The deal with Qatar’s government-backed company would form part of GAIL’s efforts to diversify its imports to avoid disruption.

GAIL is also considering setting up a $4.9bn ethane cracking facility near its LNG import facility in the western part of the nation.